THE Royal Mail's urban post office closure programme is a key element in its drive towards long-term profitability, its director of Welsh Affairs, Gareth Davies, said yesterday.

THE Royal Mail's urban post office closure programme is a key element in its drive towards long-term profitability, its director of Welsh Affairs, Gareth Davies, said yesterday.

And Mr Davies, a former Welsh rugby international and chairman of the Sports Council for Wales, said Royal Mail's chief executive Allan Leighton had replaced a "can't-do with a can-do" culture at the Government-owned business which employs more than 200,000 UK-wide, including 10,000 in Wales.

Mr Davies, addressing a meeting of Cardiff Breakfast Club at St David's Hotel and Spa, said that in Wales post office closures was a "thorny issue," but said many were not profitable ventures.

In Wales 130 of its 440 urban post offices are to close.

Mr Davies said the Government-enforced closure programme would give those remaining a bright future.

He said, "In Llanelli where there are 38 post offices. We are closing seven, of which three are all within half-a-mile of each other.

"We have to streamline our post office network to ensure that those that survive are viable entities.

"The reality is that some postmasters and postmistresses want to go as they are losing money hand over fist.

"If we want to be viable we have to make tough decisions."

Mr Davies said that money would be made available from the Royal Mail and the Welsh Assembly Government to help those that remain improve profitability.

The Royal Mail currently has no plans to close any of Wales' 900 rural post offices, although Mr Davies said the situation would have to be reviewed if the Government's £450m closure protection subsidiary is not renewed after 2006.

Two years ago the Royal Mail, which arguably had the UK's worst industrial relations record, posted massive losses of £1.2bn. However, through a more commercial focus and sizeable redundancy programme, this year the Royal Mail is forecasting operating profits of £200m - although its trading position will be less buoyant due to exceptionals such as redundancy pay-outs.

"One of the first things he did was to press the board as to why they had ditched the name Royal Mail for Consignia.

"He was told it couldn't be changed as it required the permission of the Queen.

"He then phoned his friend Prince Charles who within the week had agreed for him to meet the Queen at Buckingham Palace.

"She agreed that she didn't like the new name, but that she was most upset by the fact that no one had asked her when they changed it. She then signed a piece of paper effectively giving her consent and within three weeks it was the Royal Mail again."

As part of its drive towards improved profit margins the Royal Mail has forged links with the Bank of Ireland with a view to offering financial products from its 17,000 UK-wide post offices.

Since moving into the travel exchange sector two years ago it is now the biggest player in the UK with a 25% market share.

Cardiff Breakfast Club is sponsored by Bank of Scotland, Marsh UK, Morgan Cole and The Western Mail.